In a country like Pakistan, buying a car is, apparently, the second-biggest financial decision that people take in their life after property investment. It requires a lot of research and deliberation; you need to skim through the auto market and carefully shortlist the options of vehicles that fit your budget and requirement before undergoing any deal. However, these days, you can also buy your desired car on easy instalments by conveniently choosing from many available bank loan schemes offering auto financing in Pakistan. But before that, you need to have a comprehensive knowledge about the current auto loan rates in Pakistan.
In this blog, we have compiled all the necessary information as well as an estimated price chart acting as an auto loan calculator that will help you in choosing the most suitable instalment plan for the vehicle you intend to buy. So, let’s begin with knowing more about car financing in Pakistan
Which Bank is offering Car Financing in Pakistan?
Auto financing is now being offered by almost all the leading banks in Pakistan, including Habib Bank Limted (HBL), Bank Alfalah, Habib Metro Bank, Bank Al Habib, Muslim Commercial Bank, Meezan Bank, Dubai Islamic Bank, JS Bank and UBL. Keeping in view the recent growth of refurbished/imported cars sector, most of these banking institutions have also started offering auto financing on used cars along with brand new vehicles.
Process to Apply for Car Financing
The procedure you need to undergo in order to apply for a car financing scheme varies from bank to bank. However, the documentation, eligibility criteria for car finance in Pakistan are mostly the same with slight variations. You may experience the difference in auto loan rates in Pakistan depending on the duration of the instalment plan you choose.
Note: A banking institution offering the lowest interest rate on auto loan in Pakistan is generally considered the best bank for car loan by consumers.
Eligibility Criteria and Required Documentation
Almost all of the banks in Pakistan normally require applicants of the car financing scheme to meet certain eligibility criteria, along with the submission of necessary documentation and assurance of financial security.
So, if you want to know that you are eligible to apply for a car finance in Pakistan or not, then take a look at the following pointers:
- First of all, you need to be a holder of Pakistani Computerised National Identity Card (CNIC)
- People falling in the age group of 22 to 65 years can apply for car finance. (age bracket may vary from bank to bank)
- Applicants with steady source of income are considered eligible for auto financing such as rental income, monthly salary income, agricultural income or income from a running business.
Here is a list of documents that you usually need to submit when applying for a car loan.
- A passport size photograph.
- A copy of your Computerised National Identity Card (CNIC),
- Bank statements for a certain period of time (usually six months) to make sure that the applicant has a steady source of income
- Salary slips/certificates, if applicant is a salaried individual
*Requirement of document for car financing in Pakistan may slightly vary from bank to bank.
Which Car Can You Buy on Instalment With Your Budget?
As we already mentioned, a financial institution with the lowest interest rate on auto loan in Pakistan is generally considered the best one to apply for a car loan. Let’s list down some of the most popular brand new cars with the current rates of their monthly instalment.
Suzuki Alto VX – Monthly instalment starts from around PKR 19,819 with an average initial deposit of PKR 225,342 on a 7-year loan tenure and 15% down payment.
Suzuki Cultus VXL – Monthly instalment starts from around PKR 32,634 with an average initial deposit of PKR 365,652 on a 7-year loan tenure and 15% down payment.
Toyota Yaris GLI (1.3) – Monthly instalment starts from around PKR 42,071 with an average initial deposit of PKR 468,972 on a 7-year loan tenure and 15% down payment.
Toyota Corolla GLi 1.3 VVTi – Monthly instalment starting from around PKR 41,315 with an average initial deposit of PKR 460,692 on a 7-year loan tenure and 15% down payment.
Note: The rates of monthly instalment and initial deposit may change as the amount of down payment vary, which is assumed to be 15% in all of the four cases mentioned above. Also, the processing fee may also vary from bank to bank and vehicle to vehicle.
Formula That Serves As an Auto Loan Calculator
Formula that you can use for the estimated calculation of auto loan rates is based on the parameters such as vehicle’s year of production, model, version, duration of instalment plan and amount of down payment.
Formula Used As Monthly Auto Loan Calculator
Here is a general formula used to calculate the rate of monthly payment on your acquired auto loan for a particular time period.
Monthly Interest = (rate of interest/12 X Principal Amount)
1 – (1 + rate of interest/12) N X 12
P = Principle Amount (full amount that needs to be paid)
N = Duration of Instalment in Years
Different variations of the above given formula are commonly used by leading banks and financial institutions in Pakistan for the manual car loan calculation.
Latest Estimated Auto Loan Rates in Pakistan offered by Different Banks
Now that we have discussed the eligibility criteria and required documentation for auto financing in Pakistan, let’s take a look at the table giving us a general estimation of the auto loan rates depending on the duration of the instalment plan, which usually varies from 1 year to 5 year. The principal amount here is assumed PKR 10 lakh with 15% of down payment in the below given chart.
Principal Amount: PKR 1,000,000
Down Payment (15%): PKR 1,50,000
Finance Amount: PKR 8,50,000
|Instalment Years||Total of Monthly Instalments||Total of Monthly Insurance Installment||Total Monthly Installment|
|1||Rs. 75,426||Rs. 0||Rs. 75,426|
*The above data is tentative and may vary at the time of actual booking
Remember, before investing in any car finance scheme, you need to go over the current auto loan rates in Pakistan. Have any questions or feedback regarding our blog? Send us an email at email@example.com.
Meanwhile, if you are also willing to own a property on instalment, then here is a checklist of steps you need to take before applying for a home loan. For more informative pieces, subscribe to Zameen Blog – the best lifestyle blog in Pakistan.